Hi,
I have been looking for a stategy which will have limited profit potential and limited loss risk . With the introduction of 50 points strike price difference for nifty, there is a possibility of using different strategies with this objective.
One such strategy is Iron Condor. However, broken wing butterfly or condor strategy has a potential to give better profit. Especially if the risk is more on the upside or downside this strategy will score over Iron Condor. Please see;
http://www.optiontradingpedia.com/put_broken_wing_condor_spread.htm.
I am not an expert option trader but I believe the broken wing strategy will be simple to implement and will not have unlimited risk like short straddles or strangles. Having said that, I am sure there must be criteria like when to enter/ exit depending on expiry/volatility etc.
Another advantage I see for this strategy is one does not have to constantly monitor the trade.
I would welcome members like DanPickUp to enlighten me and if possible ,walk through the strategy for nifty.
Just like the difference between short strangle and short straddle, there is a difference between broken wing butterfly and condor. I would like to know the pros and cons of these strategies.
Thanks and regards,
gmt900
I have been looking for a stategy which will have limited profit potential and limited loss risk . With the introduction of 50 points strike price difference for nifty, there is a possibility of using different strategies with this objective.
One such strategy is Iron Condor. However, broken wing butterfly or condor strategy has a potential to give better profit. Especially if the risk is more on the upside or downside this strategy will score over Iron Condor. Please see;
http://www.optiontradingpedia.com/put_broken_wing_condor_spread.htm.
I am not an expert option trader but I believe the broken wing strategy will be simple to implement and will not have unlimited risk like short straddles or strangles. Having said that, I am sure there must be criteria like when to enter/ exit depending on expiry/volatility etc.
Another advantage I see for this strategy is one does not have to constantly monitor the trade.
I would welcome members like DanPickUp to enlighten me and if possible ,walk through the strategy for nifty.
Just like the difference between short strangle and short straddle, there is a difference between broken wing butterfly and condor. I would like to know the pros and cons of these strategies.
Thanks and regards,
gmt900